Use This Fear-Based Sell-Off To Buy the Dip

By Kelly Green

I have a degree in economics. Although my specialties are game theory and econometrics, it's the basics that I use every day. And I bet you use this logic without even knowing it. 

In economics, there is a hypothetical unit of measurement called the util, or utils plural. 

We use it to talk about other concepts like the law of diminishing marginal utility. This is when the satisfaction — or marginal utility — of a good or service declines as more of it is consumed. 

The first scoop of ice cream is good, and maybe the second is just as good. But as you get to scoop five or six … you aren't hungry for it anymore. And you may be developing a stomachache. 

My family makes fun of me because when they're facing a decision (just about anything), I ask, "How many utils do you get from that?"

Even if you don't put it in those terms, I'm sure you do that multiple times a day. I know I do. 

I have a different coffee order depending on which local joint I'm going to hit up on a given day. 

At some places, I do not get $7 worth of utility for an espresso drink with non-dairy milk. But I have another favorite drink there where the cost and benefit equal out. 

I frequently find trends — and even companies — that I like, but find that I'm not willing to pay the price for them. I don't think I'm going to get the utility or its gain that I want at those prices. 

That's how I've felt about the tech sector overall. 

But the recent turmoil in the market just may have created an opportunity to find some discounts in the market. 

Take a look at the Nasdaq Composite as of yesterday: 

So, I headed over to the stock screener on WeissRatings.com …

I wasn't exactly sure what criteria I wanted to use to find these discounts. But I knew that I wanted to see stocks in the "Buy" range within the information technology sector. 

Then, I decided to add some columns so I could take a look at some pricing information. 

I settled on the 7-Day, 30-Day, 60-Day and 90-Day Total Returns. 

I was also curious about the date of the stock's 52-Week Low Price. 

There are, of course, many other columns that you could add. These are just the handful I wanted to look at today.

No matter which columns you decide to add, all you have to do is click in the gray area of that column heading and all of the data will sort. 

The Company With the Lowest 30-Day Total Return

Teradyne (TER) has a 30-day loss of 24.3%.

The shares have returned to their November 2021 prices before they saw a massive run-up. 

It also looks like shares may have found a price level where they will trend sideways. 

Twice in the past year, shares have bounced around this level, suggesting … 

If you're not familiar with Teradyne, the company designs, develops, manufactures and sells automatic test equipment. 

This is the equipment that makes and tests the components of everything around us. I would bet that Teradyne equipment is responsible for multiple things that you use every day. 

The company pays a quarterly dividend of 10 cents. That's only around 0.39% annually, but it did continue to pay that to its shareholders through the entirety of the pandemic without a cut. 

More importantly, since August 2019, the company has only slipped into the "Hold" range once … and only for 68 days. Then, Teradyne was upgraded to a "B" in November. 

So, if you're looking to add a company that's integral to the semiconductor and other sensitive components market, you'd be able to get into shares of Teradyne for much less than you could have over the past three months. 

The Company With the Lowest 90-Day Total Return

Adobe (ADBE) is down 30% in the past 90 days. 

Shares are seeing prices they haven't seen since March 2020. 

And if you look closely, you might suggest that the shares have found a support level here around $430. Even if shares trend sideways through the uncertain market … 

Adobe has been rated a "Buy" since April 2016. It was recently downgraded to a "B-" in January. 

We've seen it hit a "B-" before, but it's still managed to keep its status. Even if it does slide to a "C+" … that's still a "Hold" signal. 

Adobe is a diversified software company that operates worldwide. It's cloud and enterprise offerings are used by companies and individuals day in and day out. And we don't think that's going to change any time soon. 

If you've been eyeing up Adobe to add to your portfolio, here's a chance to grab it at a 30% discount. 

The Company With the Most Recent 52-Day Low

For this last one, I added an extra filter. I wanted to only show stocks that had a recent upgrade. 

That immediately took my list from 112 to just 12. 

Then I decided to sort to find which one had most recently hit a 52-week low. 

MKS Instruments (MKSI) found a new 52-week low on Feb. 24.  

It did bounce off that price, but it's hard to say whether that's going to be a sideways channel … or one that will trend down. 

MKS Instruments is a manufacturer of measurement and control instruments that are used in the semiconductor, industrial technologies, life and health sciences and research and defense markets. 

So there's no doubt that its products are useful and have solid demand. 

However, unlike the two previous companies, this one has a choppier ratings history. 

Prior to 2018, it had no problem holding a solid "Buy." Now, it tends to jump back and forth between "C+" and "B-." 

Most recently, it was upgraded to a "B-" last week due to an increase in operating cash flow, net income and earnings per share. 

This one's definitely worth adding to a watch list. And a deep dive into all the numbers might give more insight.

I can't stress how many different ways there are to use the Weiss Ratings ... 

Every time I open it, I think of more combinations and what they may help me discover. 

I'd love to hear if you've taken the time to try out the Weiss Ratings stock screener. And if so, what are your favorite combinations? You can always shoot me a line here.  

Best,

Kelly Green